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What options do you have available to you when you’ve been receiving Social Security disability payments – and you’re nearing Full Retirement Age (FRA)? A reader recently asked this question as she and her husband are facing decisions with just such a situation…
Disability Benefits at Retirement Age
As you reach FRA, your Social Security Disability Benefit will automatically convert over to a Retirement Benefit, at the same amount.
What does this mean? Essentially, once you reach FRA, since you’re now on a Retirement Benefit, you have all of the features available to you as if you had not received any benefit prior to this point and you’re now retired. So your spouse can collect Spousal Benefits based on your Primary Insurance Amount; Survivor Benefits are also available; and you can choose to Suspend your benefits at FRA (no need to File before suspending, you have effectively filed when your Disability Benefit converted to Retirement Benefits).
Just keep in mind that by suspending your benefits, you’re suspending all benefits associated with your record. Any spousal or dependent’s benefit will likewise be suspended and not paid.
By suspending, you can earn Delayed Retirement Credits (DRCs) of 8% per year up to age 70, which will permanently increase your own benefit and your spouse’s potential future Survivor Benefit.
Obviously, there is no requirement for you to change anything at all once you reach FRA – you can continue receiving the Retirement Benefit the same as you have been receiving the Disability Benefit up to this point.
It’s an unusual situation, but something to keep in mind if you happen to be facing this circumstance.
Sterling Raskie, MSFS, CFP®, ChFC®
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